When Personal Problems Become Business Problems

A divorce is a very private thing, except of course when it isn’t. And an employee’s (or executive’s) private struggles are, well, private — except when various kinds of business analysts start taking notice of those struggles.

Case in point: the bitter lawsuit over the terms of the difficult divorce of Elon Musk, one of the co-founders of PayPal and current CEO of Tesla Motors. For an outline of why the divorce resulted in a lawsuit, see this blog entry, by Jeanette Bicknell: Challenge to Confidentiality in Mediation? Basically, Musk’s ex-wife, Justine, is challenging the terms of the divorce settlement, and it looks likely to be a long, drawn out court battle.

The whole thing is a sad event for the former couple (and their 5 children) but it is also presenting problems for at least one of Mr. Musk’s companies, Tesla. See this piece from auto-industry website FutureCars:Could Elon Musk’s Divorce Affect Tesla’s IPO?

Sources are saying that the upcoming Tesla Initial Public Offering will be for between $1 and $1.5 billion or $10-$12/share, but all of this could be in jeopardy because of CEO Elon Musk’s pending divorce.

So the problem here is more than just the worry that an ugly personal battle is. And it’s not just the worry that Musk’s personal issues are a distraction from his management duties, though that has been suggested. No, according to the FutureCars story, Musk’s bitter divorce could have very serious implications for Tesla Motors, particularly if the court decides that Mr. Musk has to give some of his stock portfolio to his ex-wife:

If [Musk] did lose a large shareholding, that would default Tesla’s recent Department of Energy loan and could cause the S-1 filing for IPO to go in the round file….

So, the question for discussion: do investors in Tesla have the right to tell Mr. Musk to get on with it and settle the lawsuit with his ex-wife? Are investors (or employees, for that matter) essentially stakeholders in the Musk vs Musk court battle? Or is that an entirely personal matter, and none of investors’ business?

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3 comments so far

Jilly
on
October 8, 2010

Perhaps a more interesting question than that of stock division is the
ability of anyone to trust the ethics of a person who fails in meeting such
basic legal requirements as fiduciary responsibility to their spouse, and
refraining from interfering in the impartiality of a mediation process. I am
not stating that Mr. Muskdid either of these things, but these are the more
significant questions raised by the article, and were I an investor in any
company in which he was involved, they would also be the questions that
troubled me.

Yes, I couldn’t agree more with the comment made by Jilly. Sure, these are essentially personal matters and do not fall in within the domain of public scrutiny. However, it sure raises serious concerns about the ethical moorings of a person who would choose to marry another and spend his time in happy consortium while (un)happily haggling over the divorce settlement, with hazardous potency to affect the future of the IPO itself! Are these warning signals to the investors about the level of trust and confidence that they can choose to place in such a person as Mr. Muskdid!

He has been writing The Business Ethics Blog since November of 2005. The blog is now exclusively syndicated by Canadian Business magazine.

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